Finally, the Federal Reserve slashed interest rates for the first time since 2020 to address slowing economic growth. The central bank cut rates by 50 basis points (bps) to 4.75%-5% after holding it at a 23-year high for 14 consecutive months since July 2023.
This shift in its monetary policy approach shows greater confidence that inflation is moving sustainably toward the 2% target level. It aims to support a stable economic environment without triggering a recession or a significant rise in unemployment.
The central bank also projects two more rate cuts of another 50 bps by the end of this year in its final two meetings this year, due in November and December. It indicates a 100 bps rate cut next year and a 50 bps cut in 2026, which means four more rate cuts in 2025 and two in 2026.
Lower interest rates generally lead to reduced borrowing costs, which can stimulate economic growth. This can positively impact sectors like real estate, consumer discretionary and financial services, which are typically sensitive to interest rate changes. In real estate, for instance, lower rates can boost housing market activity by making ...
